Will Marvell Technology Group Ltd. (MRVL) Find a Floor?

Chipmaker Marvell Technology Group Ltd. (MRVL) has stabilized after offering lackluster sales guidance

by Kirra Fedyszyn

Published on Dec 7, 2015 at 11:45 AM
Updated on Jun 24, 2020 at 10:16 AM

Chipmaker Marvell Technology Group Ltd. (NASDAQ:MRVL) offered disappointing third-quarter revenue guidance. As such, MRVL was halted in pre-market trading, and was down 5.7% at one point, but has since pared its losses to flirt with breakeven at $9.24. 

The stock has already lost nearly 37% of its value in 2015, and has nearly halved itself since hitting a three-year high of $16.78 in February. The shares dropped off sharply in September, when MRVL revealed that it had launched an internal accounting probe that would lead to second-quarter losses. The investigation is ongoing, and the company has been contacted by the Securities and Exchange Commission (SEC) and U.S. Attorney's Office in regards to the probe.

In the months since the investigation began, MRVL has been hit with a mix of analyst attention and lost its external accounting firm, PricewaterhouseCoopers. Currently, 19 brokerages providing coverage on the stock rate it a "hold" or worse, versus just three "buy" or better ratings.

That hasn't been deterring options traders, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MRVL's 50-day call/put volume ratio of 15.07 -- indicating more than 15 calls were bought to open for every put over the last 50 trading days -- ranks in the 89th percentile of readings from the last 12 months.

Today, options traders are favoring puts more than usual. Although the most active option is the January 2016 10-strike call, calls are trading at only 64% of the average intraday rate, while puts are crossing the tape at twice the average pace. In fact, today's put volume on Marvell Technology Group Ltd. (NASDAQ:MRVL) is on pace for the 85th percentile of its annual range, and the day's put/call volume ratio of 0.67 is in the 77th percentile. Still, it appears that many of these contracts are being sold to open, suggesting some traders are hoping for a short-term floor.


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